Low-Ball Offers for the Unemployed: Just Our Free-Market System at Work

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CareerBuilder had a new survey out today, and on first glance, it will make you cringe.

Here’s the headline: “More Than Half of Unemployed Workers With Job Offers Said the Pay Was Over 25 Percent Below Previous Salary.”

Sounds bad, doesn’t it? Well perhaps, but could it be possible that as bad as that sounds that it is simply a reflection of our free market system at work?

According to a new survey from Personified, the talent consulting arm of CareerBuilder (and I’m sorry they are not making it available so I can link to it here), unemployed workers may be eager to find a new job, but many are opting to hold out for a better offer. It details the following:

  • Some 17 percent of unemployed workers have received at least one job offer since they have become unemployed, and of those people, 92 percent rejected the offer;
  • Another 54 percent reported that the pay they were offered was more than 25 percent below the salary they earned in their most recent position;
  • Unemployed women, the survey found, were less likely to receive a job offer. Only 14 percent of unemployed women said they had been offered at least one position during their unemployment, compared to 20 percent of unemployed men;
  • Men reported a higher incidence of offers falling short of their salary expectations, with 56 percent of men stating that the pay offered was more than 25 percent below their previous salary, compared to 49 percent of women.

“Employers are adding jobs at a gradual, but steady pace and workers are feeling a greater sense of optimism in their job prospects,” said Mary Delaney, President of Personified, in a press release about the survey. “Rather than jumping on the first job offer that comes their way, workers are assessing which opportunities really make the most sense for them in terms of compensation and long-term potential.”

A glut of workers on the market

While all of that is certainly true, this survey underlines something we all also know to be true: with a glut of unemployed workers available, employers are low-balling many of them when they have job openings and are offering a lot less money than the workers were previously making.

In response, some workers (those who can afford to wait for something better) are opting to pass on the low-ball job offer and wait until something that pays more comes along.

I’m not sure how many unemployed employees are actually that picky, but one shouldn’t immediately jump to the conclusion that there is something wrong with organizations offering unemployed people less money than they were getting before.

They are simply doing it because of the law of supply and demand; that is, there’s a huge supply of workers and not a huge demand for them. That means that the price of those workers – the wages or salary they are paid – goes down.

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No one working today likes to hear that, but it is no different than when we encounter a glut of anything, whether it be bananas or big-screen televisions. When supply overwhelms demand, the price goes down.

One CEO: where are unhappy workers going to go?

I even heard the CEO of a company I used to work for make this point when he was asked about what a company-wide pay cut was doing to morale. Wasn’t he worried about employees leaving?

His response was simple: where are they going to go? Where are the jobs they are going to jump to if they are unhappy here?

He was right about that, of course, although I always felt that such an attitude wasn’t good for employment engagement or keeping your best people around in the long-run. And as we’ve seen from other surveys, such an attitude simply delays the day of reckoning when employees DO have other jobs they can jump to.

But in the short term, all of this simply shows that our free-market system is alive, well, and working. I remember all too well the other side of this coin – the hiring frenzy during the dotcom boom of the late 1990s — and although I don’t expect to see that again anytime soon, I don’t remember many workers complaining about all the jobs floating around back then.

Yes, this survey just reinforces that our system works, bad times or not. As painful as it is right now, we should at least take solace in the fact that it will eventually turn around again – because that’s what a free-market system is all about.

John Hollon is Editor-at-Large at ERE Media and was the founding Editor of TLNT.com. A longtime newspaper, magazine, and business journal editor, John has deep roots in the talent management space. He's the former Editor of Workforce Management magazine and workforce.com, served as Editor of RecruitingDaily, and was Vice President for Content at HR technology firm Checkster. An award-winning journalist, John has written extensively about HR, talent management, leadership, and smart business practices, including for the popular Fistful of Talent blog. Contact him at johnhollon@ere.net, connect with him on LinkedIn, or follow him on Twitter @johnhollon.

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3 Comments on “Low-Ball Offers for the Unemployed: Just Our Free-Market System at Work

  1. This is tough. Companies will initially gain from this. Being able to obtain top talent for much less than what they used to pay. That's great right? They can continue to grow with the money they saved- they have less of it right now. But as the market turns around- the talent will start looking around and find a company that will bring them back to that level they were once at. The company that once gained from getting the great talent for cheap- will then be hit with having to find new employees and the cost of on-boarding all over again.

  2. This is pure garbage! People are NOT commodities to be bought and sold in the “free market syatem”! Why should I accept a job that pays not even enough to pay my bills? Is wanting a “living wage” too much to ask? I think not. Pretty hard to get motivated to go out on a winter morning, spend fifteen minutes scraping the car windows to get ready to drive 10 or more miles one way to work (at nearly $4.00/gal. for gas), for $10/Hr. don’t you think?! I’m NOT so many barrels of oil or bushels of wheat! I have ever increasing costs to bear just like any employer, and employers should be well aware of the fact that one of their increasing costs is skilled and competent labor. Employers are paying the same as 20 years ago. Dare I ask if anyone out there is paying 1993 rent, or 1993 price for a loaf of bread, or 1993 price for gasoline, or 1993 utility rates, etc…?

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